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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






2. Total product divided by labor employed. APL = TPL/L






3. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






4. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






5. Entry of new firms shifts the cost curves for all firms upward






6. AVC = TVC/Q






7. Demand for a resource like labor is derived from the demand for the goods produced by the resource






8. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






9. Ei = (%dQd good X)/(%d Income)






10. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






11. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






12. AFC = TFC/Q






13. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






14. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






15. Exists at the point where the quantity supplied equals the quantity demanded






16. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






17. The difference between total revenue and total explicit costs






18. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






19. The additional cost incurred from the consumption of the next unit of a good or a service






20. The additional benefit received from the consumption of the next unit of a good or service






21. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






22. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






23. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






24. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






25. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






26. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






27. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






28. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






29. The price of a good measured in units of currency






30. Entry (or exit) of firms does not shift the cost curves of firms in the industry






31. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






32. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






33. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






34. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






35. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






36. The rational decision maker chooses an action if MB = MC






37. A firm that has market power in the factor market (a wage-setter)






38. Ed < 1






39. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






40. The total quantity - or total output of a good produced at each quantity of labor employed






41. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






42. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






43. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






44. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






45. Es = (%dQs) / (%dPrice)






46. TR = P * Qd






47. The lost net benefit to society caused by a movement away from the competitive market equilibrium






48. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






49. The marginal utility from consumption of more and more of that item falls over time






50. Models where firms are competitive rivals seeking to gain at the expense of their rivals